Dairy Program Improvement Act of 1985

Dairy Program Improvement Act of 1985 - Amends the Agricultural Act of 1949 to set FY 1986 and 1987 milk price supports at the July 1, 1985, level. Bases FY 1988 and 1989 levels on production costs, productivity increases, and a fixed dollar amount. Permits price adjustments based on Government purchase.

Amends the Agriculture and Food Act of 1981 to extend Federal milk marketing order authority through 1989.

Amends the Agricultural Act of 1949 to extend authority to transfer dairy products to the military and VA hospitals through 1989.

Amends Federal law to extend dairy indemnity authority through 1989.